LexOPG POWER GENERATION PRIVATE LIMITED versus ENEXIO POWER COOLING SOLUTIONS INDIA PRIVATE LIMITED & ANR.
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[2024] 9 S.C.R. 490 : 2024 INSC 711 OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Private Limited & Anr. (Civil Appeal Nos. 3981-3982 of 2024) 20 September 2024 [Dr. Dhananjaya Y. Chandrachud, CJI, J.B. Pardiwala and Manoj Misra,* JJ.] Issue for Consideration Issue arose as to whether the arbitral award is in conflict with the public policy of India, or/and is vitiated by patent illegality appearing on the face of the award; whether the holding company could have been subjected to arbitration and made jointly and severally liable along with the project beneficiary-appellant for the award; whether respondent’s claim for the outstanding principal amount barred by limitation; whether the counter claim, in respect of cost of repair/replacement of gear boxes and fan modules, could be treated as barred by time when the other side’s claim, arising out of same contractual relationship, was found within limitation; whether arbitral award for payment of the outstanding principal amount with interest is perverse; whether the reasoning of the arbitral tribunal is flawed and vitiated by adopting different yardstick for adjudging the counterclaim than what was adopted for adjudging the claim; if so, whether it vitiated the award and rendered it vulnerable to a challenge u/s. 34 of the Arbitration and Conciliation Act, 1996. Headnotes† Arbitration and Conciliation Act, 1996 – s. 34(2)(b)(ii) – Arbitral Award – Challenge to – Arbitral award, if in conflict with the public policy of India, or/and vitiated by patent illegality appearing on the face of the award – Appellant company floated composite tender for design, manufacture and commissioning of an air-cooled condenser unit, however, supply and erection orders issued by its holding company – Appellant later confirmed those orders – Respondent had bid for the project – Dispute between parties as regards declaration qua invalidity of debit notes, outstanding principal amount and * Author [2024] 9 S.C.R. 491 OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Private Limited & Anr. interest – Respondent invoked arbitration – Arbitral award passed an award in favour of the respondent, holding that the holding company and appellant jointly and severally liable; that declaratory relief sought by respondent qua debit notes-towards liquidated damages and customs duty beyond the period of limitation, however, claim for unpaid dues payable under the contract within the period of limitation – Single Judge of the High Court set aside the award, however the Division Bench restored the same – Justification: Held: Division Bench of the High Court justified in setting aside the judgment and order of the Single Judge and restoring the arbitral award – No palpable error in the arbitral award as to be termed ‘patently illegal’/‘perverse’, or in conflict with public policy of India – Though the ACC Unit /project was of the appellant, the holding company of the appellant actively participated in the formation of the contract for the project – They not only acted as a single economic entity but as agents of each other – Hence, the arbitral tribunal justified in holding that holding company was bound by the arbitration agreement and jointly and severally liable along with appellant to pay the awarded amount – Claim of the respondent was an indivisible claim for compensation in lieu of goods supplied, and work done, based on breach of the contract, thus limitation for the claim governed by Art. 55, and not by Arts. 14, 18 and 113, of the Schedule to the 1963 Act – Claimant’s claim for the outstanding principal amount matured on 19 March 2016, thus, limitation started to run from that date – However, even if limitation is counted from 21 September 2015, deemed date of completion of the supply/work (as found by the tribunal) it would have no material bearing on the award – Limitation for the claim as well as counterclaim, other than those relating to cost of repair/ replacement of gear boxes and fan modules, stood extended, u/s. 18 of the 1963 Act, on the basis of acknowledgement made in the minutes of meeting, and, thus, those were within limitation and rightly considered on merit – Counterclaims qua cost of repair /replacement of gear boxes and fan modules rightly held barred by time as in respect thereof there was no recital in the minutes of meeting – Rejection of prayer to declar
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